* Asia ex-Japan stocks hit lowest since late Dec
* Dollar subdued after cautious Fed
* Global exchange merger news helps boost ASX shares
* Rio Tinto posts record H2 results
(Updates prices)
By Ian Chua
SYDNEY, Feb 10 (Reuters) - Asian stocks suffered a second
session of sharp losses on Thursday, while the dollar struggled
to make much headway after the U.S. central bank chief signalled
the recovery in the world's biggest economy was still fragile.
European stocks, however, were expected to open slightly
higher, according to financial bookmakers.
Worries about further interest rate hikes in China and
whether authorities in emerging Asia can tackle inflation
without derailing longer-term growth have prompted investors to
lock in profits on some of last year's best performing markets.
Japan's Nikkei slipped 0.1 percent, while shares
elsewhere in Asia slid 1.3 percent, wiping out
this year's gains to reach lows not seen since late December.
Hong Kong's Hang Seng index fell 0.7 percent, South
Korea's KOSPI lost 1.8 percent and Singapore's Straits
Times Index shed 1.2 percent.
Last year's laggards like the Nikkei, however, remained well
in the black for the year as investors rotated into some
developed markets from emerging ones.
"It's not like buying in Japanese stocks has completely
stopped, but investors have been looking for a reason to take
profits and now they're cautious about overheating in the
market," said Norikazu Kitta, strategist at Nikko Cordial
Securities.
Despite the generally downbeat mood, there were patchy
bright spots in the market. Among them, shares in Australian
bourse operator ASX jumped 4.7 percent, while Singapore
Exchange gained 0.7 percent.
Investors are hoping that merger news between major bourses
like the NYSE Euronext and Deutsche Boerse would boost prospects
for Singapore Exchange's $7.9 billion takeover bid for ASX,
which is facing political hurdles in Australia.
Rio Tinto put on 0.3 percent ahead of its December
half results. After the Australian market close, the global
miner reported a record second-half profit that more than
doubled from a year earlier.
Investors, however, pushed SingTel shares down 1.6
percent after the telecom company unveiled a 2.2 percent fall in
quarterly profit.
DOLLAR SUBDUED
Meanwhile, the dollar index , which tracks the
greenback's performance against a basket of major currencies,
edged up 0.2 percent to 77.786 after a steep decline overnight.
Many traders still think the dollar is in a holding pattern
for the near term as the euro was also lacking upward momentum
of its own after the European Central Bank last week quelled
expectations of an early rate hike.
The euro traded at $1.3690 , retreating from a
one-week high around $1.3744 set a day earlier.
"It's difficult for now for the euro to rise above the peak
hit earlier this month. It will need a fresh factor to go beyond
that peak," said Keiji Matsumoto, a strategist at Nikko Cordial
Securities.
Also under pressure, the Australian dollar hit
one-week lows at $1.0074 even after another solid jobs report as
investors bet the numbers were not strong enough to make a rate
rise more likely anytime soon. []
U.S. crude futures drifted up 0.2 percent to $86.87 a
barrel, and Brent crude rose above $102, supported by
ongoing tension in Egypt and tighter North Sea supplies.
Gold edged down to $1,361.30 an ounce, well off a
lifetime high around $1,430 hit in December, while copper, which
hit an all-time high of $10,160 per tonne on Monday, traded at
$9,970 .
(Additional reporting by Ayai Tomisawa and Hideyuki Sano in
Tokyo; Editing by Andrew Marshall & Kim Coghill)
